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December 8th, 2020

Exclusive Leasing Agreement

An exclusive use clause is defined as a provision within a commercial tenancy agreement that prohibits a landlord from renting to another tenant for the same commercial purpose as the existing tenant. Exclusive use clauses are the most common in shopping malls, but can be included in any commercial lease. These clauses are important to the success of many small businesses and should be carefully considered and developed in order to be retaliatory. An effective exclusivity clause protects the tenant and future income by limiting or avoiding direct competitors in a given environment, whether it is the same location or adjacent real estate of the same landlord. In return, the owner benefits from strong sales and a more diverse mix of tenants and services to attract potential customers to the property. The conditions for breaking exclusivity clauses often include remedial measures such as terminating the tenancy agreement or healing the infringement, or if the tenant stays and wishes to remain profitable, this could result in a reduction in rent. Exclusive use clauses are often a contentious issue, because landlords want to be as specific as possible, resulting in a number of loopholes in the contract that allow them to enjoy greater freedom in the choice of tenants. At the same time, companies interested in rent should ensure that conditions are broad enough to allow for growth. These agreements are often subject to exceptions for ancillary sales. B, for example, when the insulting company does not offer a product or service as the main source of revenue, but rather as a complementary service. Exclusive use clauses apply only to future tenants.

The former occupants of the building are excluded from the agreement. It also does not apply to large anchor tenants who could potentially change the scope of their services as straddlings. For exclusive use clauses, the details are extremely important. As a tenant, you do not want the clause to be too specific to the detriment of your own business, but you also want to avoid too many exceptions that violate the purpose of the clause and leave to interpretation a large number of possibilities that would be more difficult to defend and prove in the event of an infringement. Bedrock Realty Advisors Inc. has been negotiating commercial leases for 14 years. Our team is very familiar with exclusive usage clauses – we know what we need to be careful about in the wording and we easily understand the legal jargon to get you the best deal. Contact us to find out how Bedrock helps you with your leasing, subletting and lease renewal business requirements. Commercial Real Estate Glossary > Exclusive Rental Clause.

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